Regional home sales pick up

Pending contracts nearly triple in Oct., a good harbinger

November 13, 2001|By Robert Nusgart | Robert Nusgart,SUN STAFF

Seemingly shrugging off the aftershocks of the terrorist attacks two months ago and lured by "ridiculously low" mortgage rates, homebuyers in metropolitan Baltimore propelled sales of existing homes 7.65 percent higher last month compared with October last year.

The increase in sales was sharply higher than the 2.71 percent rise in September.

Those in the market apparently paid little attention to concerns about the nation's sagging economy, although Maryland's economic circumstances appeared slightly better than the country's as a whole.

Pending sales contracts in the region - an indication of future settlements - increased 10.73 percent last month over those in October 2000. It was a reversal from September when pending sales dropped 3.72 percent, the first decline since June 2000.

Likewise, another confidence booster was the number of homes coming onto the market - growing from 3,611 properties in September to last month's 3,810, according to statistics released yesterday by the Metropolitan Regional Information Systems Inc., the multiple listing database used by real estate brokers.

"I think the negative numbers that people saw in September, to a large degree, were a result that we lost five days of business that month because of what happened after Sept. 11," said Alan R. Ingraham, president of the Greater Baltimore Board of Realtors.

"After that, people got back to some degree of normalcy, and I think October's numbers really reflect not only that [but] a patriotic defiance that I am going to live my life.

"And obviously, rates are a real catalyst to what is going on, although in October they weren't as low as they are now," added Ingraham, who also is a regional vice president for First Horizon Home Loans MNC Division.

Carroll County had the biggest gain in sales among the six metro jurisdictions, gaining 16.45 percent over October 2000. Baltimore County was next, up 15.05 percent; Anne Arundel rose 7.04 percent; Baltimore City gained 6.24 percent; and Harford County was up 2.72 percent.

The lone area with a decrease was Howard County, which was off 4.8 percent.

Mortgage rates seemingly are too tantalizing to resist. The weekly average rate on a 30-year mortgage dropped to 6.58 percent the week of Oct. 11.

But last week, Freddie Mac, the mortgage giant that supplies funds to lenders, reported that the average 30-year fixed-rate mortgage fell to 6.45 percent, the lowest since it began its weekly survey of lenders in 1971.

At the same time last year, the 30-year rate was 7.79 percent. Thus, the monthly principal and interest on a $150,000 loan at 6.45 percent would be $943, compared with $1,079 at 7.79 percent, a difference of $136 a month.

In Baltimore, the 30-year average last week was 6.69 percent, according to HSH Associates Inc., a New Jersey firm that tracks and analyzes mortgages. The lowest weekly 30-year average for Baltimore was 6.47 percent in October 1998.

"Certainly you are going to see some [mortgage] activity in November that is unbelievable," said Ingraham, who added that these rates are prompting indecisive buyers to "come off the fence."

"What is surprising, is that the pipeline of buyers is still so full," said Aniban Basu, director of applied economics at Towson University's RESI economics research center. "It is surprising given what has happened with consumer confidence generally and the economy particularly."

But Basu acknowledged that economists "might have a tendency to overstate the impact of falling consumer confidence."

Nonetheless, he expects the state's economy to continue to weaken "over the next six to eight months" and "home sales [will be] affected, even in the face of almost ridiculously low mortgage rates."

The market has changed in one aspect: It is taking longer to sell a home than before. The average days on the market grew from 66 days in October 2000 to 72 days last month.

And in Howard County, a change in the market is becoming more apparent.

"A correction has taken place, or is taking place, so it is definitely a different market than it was in the summer," said Pat Hiban, an associate broker with Re/Max Advantage in Columbia. "Stuff is not selling as fast.

"We have found that anything [priced] over $300,000 has slowed down pretty significantly. Any thing under $300,000 are still selling pretty well."

Overall, home prices in the metropolitan area continued to appreciate, as the average sales price rose to $162,414 vs. $150,666 in October 2000, a 7.8 percent increase.